William Bell<p>The <a href="https://twit.social/tags/FHLBs" class="mention hashtag" rel="tag">#<span>FHLBs</span></a> are lending out money to the smaller banks as part of the backstop of the deposit programs. The Money Center Banks can repo their AFS under water debt at the <a href="https://twit.social/tags/FRB" class="mention hashtag" rel="tag">#<span>FRB</span></a> at par, something smaller banks cannot do. The FHLBs are issuing bonds which are being purchased by the money market funds, so the money is being recycled back into the system. However at some point, this starts to creak. The community banks will be paying Fed Funds plus on those FHLB loans.</p>